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Minyan Vibes


I hope Thumper knows what she's getting herself into!


Beach blanket bingo...

Minyanville is awash in white as the critters dig in for a fight. The holiday thinned week will now be a tad lighter and that introduces the specter of outsized volatility. You can factor that into your risk profile by widening your stops, cutting down on your size or playing more concentrated than usual. With the wild swings we've seen this week, tensions are frayed and emotions are charged. Stay on your toes and keep your eyes open as we sip hot cocoa and ride this puppy into the sunset.

Frosty the philosophizer...

How can we know for certain that no two snowflakes are identical? I mean, how can we really know?

Staying warm in the minxy swarm...

We sensed that Snapper was lurking after Tuesday's reality check and he dutifully arrived for a rally contrived. As the S&P tickled resistance (on light volume) late yesterday, I double dipped into my metaphorical bear costume (two legs, or 50% conviction on the short side). Given the action in the trannies (looking good) and the homies (feeling good), I will use an uber-tight upside stop above S&P 1205. It's not an optimal set-up but given the tight risk parameters, it is a worthy try. Discipline over conviction, please, and no looking back either way.

Which little piggy will come to the market...

Technical analysis is a funny bird. One pair of eyes could look at the BKX and opine that it held the 200-day with the stochastics crossing at the bottom. That's bullish stuff and, at times, would be reason enough to sport horns. A step to the left, however, and the very same chart is textbook dandruff that is retesting the right shoulder blade (BKX 98.60ish). Retracement (on low volume) is typically the time to place your bets, particularly in a sector we believe will structurally assume a much lower weighting in the S&P. As price will serve as the ultimate arbiter, this juncture remains more of an art than a science. Step it up, Picasso, and let's paint some profits into our picture.

But what if the spark was never really ignited?

The reason assigned to yesterday's (late upside) rhyme was low-level--and unconfirmed--chatter that a big fish was gonna upgrade the semis. It was a timely rumor as the chips tested (and held) Dean Wormer (double secret) support at SOX 519ish. Despite the conspicuous absence of the sell-side goose, the hedge fund hot potato took offers first and asked questions never. I picked up a late data point that a monster gorilla--who shall remain nameless but signed the all-star guitar, was aggressively covering shorts for S&P 1194-1200. I don't know if the order grows, per se, but it makes sense given the action and buy programs we witnessed.

Vacationing at Cape Fear...

Our resident bear pulled into the office this morning covered in gel and wearing a smart blue cashmere sweater with grey slacks. There's no doubt that he's looking to impress his new squeeze and he'll have his chance if the ducks align. The word around town is that Thumper has a nasty temper and she'll be a busy little beaver if the internals flip the switch, the financials start to twitch or the semis hit a hitch. And all the while, the VXO remains nestled near 8-year lows. That's not a causation of dislocation, we know, but it's pretty obvious that conventional hedging is non-existent.

And what a month it was...

To add spice to an already saucy mix, stay on the lookout for some posturing into Monday's month end. 2005 has been all over the place and the angst is palpable in the financial community. Over the bubble and through the woods, trading has morphed into the world's largest casino and clouded what was once a noble profession. Proof positive was Toll Brother's (TOL) chairman--a guy worth a billion dollars as a function of the free market--getting on television threatening to crush the shorts. This isn't a game, Sir Robert, and that very mentality encapsulates the collective perception. I will simply ask all Minyans to exercise the thrill of discipline and leave the agony of defeat to the town criers.

Good luck today.


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